Lucent’s Legacy to IBEW:
Lost Jobs, Dashed Hopes
March 2003 IBEW Journal
No company better symbolizes to
the IBEW the shattered promise of the high-tech manufacturing industry
than Lucent.
Lucent has shed a total of 90,000 jobs and more
than 95 percent of its stock value since 2000.
Once the poster child for the future of industry
in the high-flying new economy, Lucent now is a shadow of its former
self. Lucent’s share price has declined as the company hemorrhages
money, last year posting some of the largest operating losses in
corporate history. A Securities and Exchange Commission investigation
and lawsuits threaten to tarnish the company’s attempt to
recover this year. Twelve thousand IBEW members from Lucent and
its spin-off manufacturers Agere and Avaya have lost jobs. Fewer
than 400 active IBEW members remain at Lucent.
While Lucent slashes its work force and sells its
businesses to pay high debt and try to return the company to profitability,
the outlook for the industry is grim. Lucent’s fate depends
on telephone service providers and wireless companies purchasing
its communications equipment. But telecom carriers overbuilt their
networks in the late 1990s and there is no indication they will
upgrade anytime soon.
"Lucent’s work is reflective of the
industry," said IBEW Manufacturing Department International
Representative Troy Johnson. "Until the industry turns around,
I don’t see anything encouraging."
Despite its problems, Lucent revealed in advance
of its February annual meeting that at least four top executives
last year were given multimillion-dollar packages that included
salary increases and other costly perks. Analysts characterized
the top management pay as excessive in light of the company’s
rocky financial position.
In January, IBEW negotiators agreed to a 20-month
contract with Lucent that includes a 2 percent raise this year and
another 2 percent in 2004. The contract also contains increases
in health insurance co-payments, deductibles and out-of-pocket expenses,
and modest improvements in certain dental benefits. The national
contract is effective March 1 through October 2004 and replaces
a five-year agreement. "They told us if they didn’t do
something by 2005, health care costs could bankrupt them,"
Johnson said.
Fulfilling employee benefit commitments has become
increasingly difficult for the company, with ballooning prescription
drugs and medical costs presenting the largest burden.
Lucent’s story is symbolic of American manufacturing
today. Manufacturing employment peaked in the United States in March
1998. Since then, according to the U.S. Department of Labor, more
than 2.2 million factory jobs have been lost. Today, the country
has fewer manufacturing jobs than in 1963.
Lucent was created in 1996, comprising AT&T’s
former manufacturing, installation and Bell Laboratories operations.
The company reported revenues exceeding $30 billion in the late
1990s. By January 2001, Lucent launched a restructuring, cutting
spending and costs, selling units and eliminating money-losing products.
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